Amazon's New Secret Weapon: Goodreads

By Jeff Gamet

Mar 29th, 2013 9:30 AM EDT

Amazon announced on Thursday that it is buying the reader-targeted social networking service Goodreads. The two companies aren't saying how much money is changing hands, but in the end it doesn't matter because the deal will be great for Kindle and will make more money for Amazon.

Goodreads: Amazon's Big Move into Making Kindle Social

Goodreads lets users list and rate the books they read, comment on the books their friends read, and list the titles they want to read. The company has built a fairly impressive engine for suggesting books to its users, which no doubt is one if the features Amazon is excited to get its hands on.

Amazon Vice President of Kindle Content, Russ Grandinetti, commented,

Goodreads has helped change how we discover and discuss books and, with Kindle, Amazon has helped expand reading around the world. In addition, both Amazon and Goodreads have helped thousands of authors reach a wider audience and make a better living at their craft. Together we intend to build many new ways to delight readers and authors alike.

The deal adds a piece to the Kindle experience that won't be easy to match through the social aspect that Goodreads brings to avid readers, which is the ability to find out what our friends are hooked on, and to easily see what they liked. So far, Amazon hasn't had a compelling way to draw Kindle readers into those types of discussions.

Once Amazon builds tight Goodreads support into its Kindle ebook readers and apps, as well as the Kindle store, the Etailer will have a self managed, user driven, system for highlighting popular titles, and more importantly, will have a powerful system for learning more about its customers reading preferences. With that data in hand, Amazon will be able to more effectively suggest new titles to its Kindle customers, and ultimately sell even more books.

Amazon's interest in Goodreads seems even more compelling since the social network has over 16 million members adding adding books to their accounts faster than four a second.

Goodreads CEO Otis Chandler highlighted why he sees the deal as a good move for the service's users saying, "With the reach and resources of Amazon, Goodreads can introduce more readers to our vibrant community of book lovers and create an even better experience for our members."

Imagine, for example, Kindle users seeing what their friends are reading and buying the same book with little more than a screen tap. Once purchased, the book automatically shows up in their Goodreads list where more friends see the title and they can start a discussion -- all without leaving the Kindle app.

That level of integration doesn't exist between Kindle and Goodreads yet, but I expect it will happen once the buyout deal closes. When it does, Amazon will be able to widen the gap between its Kindle store and all of the other ebook sellers, including Apple.

To see Apple's success rate at social networking you don't need to look any farther than Ping, the company's failed service where iTunes Store purchases appeared in subscriber's timelines and user's could comment on the purchases they -- and their friends -- made. Apple home-rolled Ping, and there's no reason to expect the company could do any better with an ebook-based social networking feature.

Apple could look into buying a Goodreads competitor, except Amazon already did that, too. Amazon already owns Shelfari, cutting what otherwise would've been the most likely target for Apple out of the game.

Amazon plans on letting Goodreads continue to operate as its own company, which gives it yet another advantage: Amazon can collect reading habit and preferences data from people that aren't buying ebook titles, or printed books, from its online store. Goodreader subscribers can list the books they read regardless of where they came from: stores, libraries, friends, bus benches... anywhere.

Amazon is already the big name in online book sales, and as long as it manages Goodreads wisely it will keep that lead for a long time. With Amazon's strong position, the ebook market is one place where its competitors -- including Apple -- will have to be content with second place.